SOLUTION: a firm will need 300000 at the end of 3 years to repay a loan. the firm decided that it would deposit 20000 at the start of each quarter during these 3 years into the account. the

Question 1169505: a firm will need 300000 at the end of 3 years to repay a loan. the firm decided that it would deposit 20000 at the start of each quarter during these 3 years into the account. the account yield 12% per annum compounded quarterly during the first year. what rate of interest should it earn during the remaining 2 years to accumulate enough amount into this account to pay the loan at the end of 3 years.
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
i take my previous answer back.
this can be done using a financial calculator such as the one found at https://arachnoid.com/finance/index.html

here's a display of the two steps required.

in the first step, you would make the following inputs.

present value = 0
future value = 0
number of periods = 1 year * 4 quarters per year = 4
payment amount = -20,000
interest rate % per period = 12% per year / 4 quarters per year = 3
payment is made at the beginning of each period

you would then click on fv and the calculator tells you that the future value is 86,182.72.

in the second step, you would make the following inputs.

present value = -86,182.72
future vlaue = 0
number of periods = 2 years * 4 quarters per year = 8
payment amount = -20,000
payment at beginning of period.

you would then click on ir and the calculator tells you that the interest rate % per period is 3.450286%

if you didn't get a chance to see my previous answer using excel, that can be found at https://www.algebra.com/algebra/homework/Finance/Finance.faq.question.1169507.html

an additional bonus is you get to see an answer by an other tutor who was quite proficient in arriving at the same answer.

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